What are the Importance of Organization

What are the Importance of Organization? Organization is a structured process in which individuals interact to accomplish predetermined enterprise goals. It is the foundation stone upon which the whole structure of management built. A sound organization facilitates administration specialization, encourages growth, and stimulates.

According to Allen, “A sound organization can contribute greatly to the continuity and success of the enterprise.” Thus, a sound organization can contribute to the success of an enterprise. Hence the importance and need of organization may be discussed as below.

What are the Importance of Organization?


  1. Efficient Administration
  2. Optimum Use of Human Resources
  3. Growth and Diversification
  4. Optimum Use of New Technology
  5. Coordination and Communication
  6. Training and Development
  7. Productivity and Job Satisfaction

(1) Efficient Administration

A sound organization is necessary for efficient administration and management. Organization is an important and the only tool to achieve enterprise goals. A sound organization helps the management in many ways. It defines various activities and their authority relationships in the organizational structure.

It can avoid confusion and delays as well as duplication of work and overlapping of effort. Organization is the mechanism by which management directs, controls, and coordinates the various activities in the enterprise.

(2) Optimum Use of Human Resources

Sound organization ensures that every individual is placed on the job for which he is best suited. Such matching of jobs individuals helps in better use of human talent. It also provides the benefits of specialization, which results in economy of operations and reduction in costs.

(3) Growth and Diversification

A sound organization is based on scientific principles. It contributes to the growth and diversification of the enterprise through decentralization and divisionalization organization, management can multiply its strength and undertake more activities. That is why many small firms have grown and become big.

(4) Optimum Use of New Technology

A sound organization is flexible. It has the capacity of absorbing changes in the environment. New and improved means of doing work can be introduced easily. Hence, it provides opportunity for optimum use of technological improvements.

(5) Coordination and Communication

Organization is an important means of creating coordination and communication among different departments of the enterprise Different jobs and positions are welded together by structural relationship. It specifies the clear relationships among positions and helps to ensure coordination among them. It also specifies the channels of communication among different members of the enterprise.

(6) Training and Development

A sound organizing provides a good opportunity for the development of managerial ability through proper delegation of authority and decentralization. It provides responsibility, sufficient freedom to the supervision and creative thinking in different levels. By this practice, managers are trained, developed and tested forassuming greater responsibilities in the future.

(7) Productivity and Job Satisfaction

A sound organization is based on democratic and participative management. This provides all member of the enterprise with fixed positions. Hence, the entire organizational environment is favorable for productivity and job satisfaction.

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